TMI Blog1948 (1) TMI 24X X X X Extracts X X X X X X X X Extracts X X X X ..... articular case was not agricultural income, and therefore, not assessable under the Agricultural Income-tax Act. On an application by the Commissioner of Agricultural Income-tax this reference has been made for determining the question: Whether on the facts and circumstances of the case, the sum of ₹ 90,220-1-0 derived from the sale of Sal trees in the forests of the assessee can be treated as agricultural income within the meaning of Section 2 of the Bengal Agricultural Income-tax Act, 1944. Agricultural income is defined in Section 2(1) of the Bengal Agricultural Income-tax Act. The relevant portion of the section which requires consideration in the present case is in the following terms:- 2. (1) 'agricultural income' means- (a) any rent or revenue derived from land which is used for agricultural purposes, and is either assessed to land revenue in British India or subject to a rate assessed and collected by officers of the Crown as such; (b) any income derived from such land by- (i) agriculture, or (ii) the performance by a cultivator or receiver of rent-in-kind of any process ordinarily employed by a cultivator or receiver of rent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ge and husbandry. It is, therefore, obvious that a purpose may be connected with agriculture but not necessarily ancillary to cultivation. The dictionary meanings as quoted above indicate the great diversity as to the scope of the word in its ordinary sense. This word, as used in various English Acts, has been interpreted in decisions by the Courts in England but I would refrain from going into the grounds mentioned in those decisions as both the idea of agriculture and the scheme of taxation in that country are altogether different from those in India. It will, therefore, be necessary to consider the background of the use of this word in this particular Act. The definition of the term agricultural income in this Act, viz., Bengal Agricultural Income- tax Act, is in terms similar to the one appearing in Section 2(1) of the Indian Income-tax Act. The test applied for considering what class of income is excluded from assessment under the Income-tax Act as being agricultural income will, accordingly, be the same for determining what is assessable as agricultural income under the Bengal Agricultural Income-tax Act. We must also notice in this connection the demarcation of the j ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nion, concludes the question as raised:- It was stated--and the statement was not disputed--that for a considerable period Income-tax authorities had not treated interest on rent in arrears as taxable, and that in their Manuals published from time to time this view was openly stated. In their view such interest fell within the definition of agricultural income. The Income-tax Act, 1922, had in that period been amended from time to time without a change in the definition of agricultural income. Their Lordships were asked to make the inference that the definition had thereby obtained the meaning attributed to it by the Income-tax authorities and that the legislature must be taken to have adopted the definition in the sense in which the Income-tax authorities had understood and applied it. The observations of Lord Macnaghten in Pemsel's case[1891] A.C. 531, at p. 591, and of their Lordships in Burah's case [1877] I.L.R. 3 Cal. 63, were relied on. Their Lordships are unable to accept this contention for the reason that they are unable to draw from the facts brought to their attention the inference that the legislature had by the repetition of the debated phrase adopted the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Judicial Committee in Raja Mustafa Ali Khan v. Commissioner of Income- tax, U.P. Ajmer-Merwara [1948] 16 I.T.R. 330 and on appeal from the decision in Raja Mustafa Ali Khan v. Commissioner of Income-tax, U.P. C.P. [1945] 13 I.T.R. 98; A.I.R. 1945 Oudh 44. The question which was referred to the Chief Court of Oudh under Section 66(1) of the Income-tax Act was as follows:- Whether income from the sale of forest trees growing on land naturally and without the intervention of human agency, even if the land is assessed to land revenue is agricultural income within the meaning of Section 2(1)(a) of the Income-tax Act and as such exempt from income-tax under Section 4(3)(viii) of the Act. The only question no doubt was about the forest trees growing naturally and without the intervention of human agency, and it was held that the sale proceeds such trees could not be held to be agricultural income. Their Lordships indicate a test to find out whether the trees are growing on the land naturally, there was nothing to show that the assessee was carrying on any regular operations in forestry and the jungle from which the trees had been cut was also stated to be one of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ught from the meaning of the word agriculture as given in other statutes and (2) unless there is so measure of cultivation of the land, some expenditure of skill and labour upon it, it cannot be said to be used for agricultural purposes. It is, therefore, incontrovertible that income from a virgin forest or forest of spontaneous growth is not agricultural income. The view that tilling of the soil was the sine qua non for bringing within the term agriculture has also been exploded. If there is actual tilling of the soil for producing the product, it is the unquestionable result of agricultural pursuit. It is quite evident that the view now expressed by the Judicial Committee about income from virgin and natural forests is in affirmance of the decisions of the different High Courts in India [Raja Ravu Venkata Mahipati Gangadhara Rama v. Commissioner of Income-tax, Madras ([1946] I.L.R. 1946 Mad. 745; 14 I.T.R. 92), Province of Bihar v. Maharaja Pratap Udainath ([1941] I.L.R. 20 Pat. 699; 9 I.T.R. 313), Kajumal v. Saligram ([1919] A.I.R. 1919 Lah. 222), Kajumal v. Saligram ([1924] I.L.R. 5 Lah. 50), Maharaja of Kapurthala v. Commissioner of Income-tax, C.P. and U.P. ([1945] ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rst place, the seeds are sown in beds where they germinate and are left to grow for six months. Then they are transplanted in another bed where they are left to grow for further six months; the third stage is the replanting of the young plants in the forest. They are permanently planted there as cardamom cultivation requires a considerable amount of shade. Therefore, the human element plays an important part in the bringing of cardamom plant to fruition, independent of special provision in local statutes. There is no doubt that the extent of human intervention in this case is such as to make the income from such yields an agricultural one. In In re Moolji Sicka [1939] 7 I.T.R. 493, decided by this Court in 1939, a question arose in connection with tendu leaves which were recovered from the tendu trees or shrubs for wrapping tobacco in manufacturing country. made cigarettes. A claim was put forward that the income from the sale of country-made cigarettes or biris was agricultural income inasmuch as the tendu leaves which form part of biris are agricultural products. It was found in that case that the tendu plant is entirely of wild growth and propagates itself by root suckers or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s in 15 years, to be cut down again. In order to prevent damages to the young shoots in the early stages of their growth, the areas cut down are closely guarded for one year at least from the time when the block in question has been completely denuded of trees, in order to keep cattle and men off from the lands so that they may not damage the young growing shoots. In order to promote the growth of shoots, the ground is also kept free from under growth of jungle. This is not cleared at the appellant's expense but the villagers are allowed to clear the ground of undergrowth and take the same away free of costs. These findings are accepted by the Tribunal. Mr. Khaitan, appearing on behalf of the Department, summarises the different processes adopted or required in the following terms:- (1) Parcelling out the total area of 14,000 acres into about 1,000 acres each, trees on each parcel being sold when the trees are about 15 years old, is an important agricultural process; (2) To prevent damage of the new shoots in the early stages of their growth and to give new vigour to the new shoots and saplings, the ground is kept free from undergrowth of jungle and by removal of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... perly guarded, which may be described as tantamount to tending. Mere guarding the forest area from poachers or against surreptitious removal of fuel, wood or logs cannot be considered to be any case of human intervention sufficient to make the forest produce as being an agricultural one; but the guarding of the new shoots from either being trampled under foot or being browsed by animals is something quite different in nature than simply guarding the forest area. The operation of removing undergrowth or fallen leaves, though not by the owner of the forest but by his permission accorded to villagers and others, is of some significance though not of the same extent as tending at the initial stage when the shoots appear after clearing of each period of 15 years. The last operation which is alleged to relate to agricultural planning is a part of forestry for removal of trees of certain description only. This is using human knowledge and experience for the proper utilisation of the produce of the earth. On a careful consideration of the circumstances as disclosed in the findings arrived at by the Tribunal there is no escape from the conclusion that the assessee carries on regula ..... X X X X Extracts X X X X X X X X Extracts X X X X
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